Bill Text: NJ A4278 | 2024-2025 | Regular Session | Introduced
Bill Title: Establishes cap and invest program in DEP to regulate major emitters of greenhouse gases.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-05-02 - Introduced, Referred to Assembly Environment, Natural Resources, and Solid Waste Committee [A4278 Detail]
Download: New_Jersey-2024-A4278-Introduced.html
Sponsored by:
Assemblyman HERB CONAWAY, JR.
District 7 (Burlington)
SYNOPSIS
Establishes cap and invest program in DEP to regulate major emitters of greenhouse gases.
CURRENT VERSION OF TEXT
As introduced.
An Act concerning greenhouse gas emissions, supplementing Title 26 of the Revised Statues, and amending P.L.2007, c.340.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. (New section) As used in sections 1 through 11 of this act:
"Annual allowance budget" means the total number of greenhouse gas emissions allowances allocated for auction and distribution for one calendar year by the department.
"Biomass" means nonfossilized and biodegradable organic material originating from plants, animals, and microorganisms, including products, by-products, residues, and waste from agriculture, forestry, and related industries as well as the nonfossilized and biodegradable organic fractions of municipal wastewater and industrial waste, including gases and liquids recovered from the decomposition of nonfossilized and biodegradable organic material.
"Biofuels" means fuels derived from biomass that have at least 40 percent lower greenhouse gas emissions based on a full life-cycle analysis when compared to petroleum fuels for which biofuels are capable of serving as a substitute.
"Compliance instrument" means an allowance or offset credit, equal to one metric ton of carbon dioxide equivalent, issued by the department or by an external greenhouse gas emissions trading program to which New Jersey has linked its greenhouse gas emissions cap and invest program.
"Compliance obligation" means the requirement to submit to the department the number of compliance instruments equivalent to a major emitter's covered emissions during the compliance period.
"Compliance period" means the four-year period for which the compliance obligation is calculated for major emitters.
"Covered emissions" means the greenhouse gas emissions for which a major emitter has a compliance obligation under section 4 of this act.
"Department" means the Department of Environmental Protection.
"Facility" means any physical property, plant, building, structure, source, or stationary equipment located on one or more contiguous or adjacent properties in actual physical contact or separated solely by a public roadway or other public right-of-way and under common ownership or common control, that emits or may emit any greenhouse gas.
"Greenhouse gas" means the same as the term is defined in section 3 of P.L.2007, c.112 (C.26:2C-39).
"Greenhouse gas emissions allowance" or "allowance" means an authorization to emit up to one metric ton of greenhouse gases, measured as carbon dioxide equivalent.
"Linkage agreement" means a nonbinding agreement that connects two or more greenhouse gas market programs and articulates a mutual understanding of how the participating jurisdictions will work together to facilitate a connected greenhouse gas market.
"Major emitter" means a person who meets at least one of the criteria provided in subsection a. of section 4 of this act, or who opts in to the program pursuant to subsection b. of section 5 of this act, and whose greenhouse gas emissions are therefore to be regulated by the department under the program created by this act.
"Offset credit" means a tradable compliance instrument that represents an emissions reduction or emissions removal of one metric ton of carbon dioxide equivalent.
"Offset project" means a project that reduces or removes greenhouse gases that are not covered emissions under this act.
"Program" means the greenhouse gas emissions cap and invest program created by and implemented pursuant to this act.
"Retire" means to permanently remove a compliance instrument such that the compliance instrument may never be sold, traded, or otherwise used again.
2. (New section) a. In order to ensure that greenhouse gas emissions are reduced consistently with the State's greenhouse gas emissions reduction goals established by the "Global Warming Response Act," P.L.2007, c.112 (C.26:2C-37 et al.), the Department of Environmental Protection shall establish a cap on greenhouse gas emissions from major emitters and a program to track, verify, and enforce compliance through the use of greenhouse gas emissions allowances and offset credits. A major emitter shall not emit greenhouse gases unless it retires greenhouse gas emissions allowances or offset credits commensurate with its emissions, measured over a four-year compliance period.
b. In establishing the program, the department shall:
(1) develop annual allowance budgets that limit emissions from major emitters, as provided in section 3 of this act;
(2) create a method to identify major emitters, and a method by which entities may voluntarily opt into coverage under the program, as provided in sections 4 and 5 of this act;
(3) establish provisions governing the sale, at auction, of greenhouse gas emission allowances, as provided in section 6 of this act;
(4) develop a method for meeting a compliance obligation through the use of offset credits, pursuant to section 9 of this act;
(5) develop a method for determining the annual compliance obligations of major emitters;
(6) establish provisions governing the enforcement of this act consistent with the penalty provisions of section 11 of this act; and
(7) establish provisions governing the transfer of allowances, including those issued by jurisdictions with which New Jersey has linkage agreements;
c. The department may implement the program in a manner that allows the State's program to be linked with those of other jurisdictions. The department shall evaluate whether such linkage will provide for a more cost-effective means for major emitters to meet their compliance obligations in New Jersey while recognizing the special characteristics of the State's economy, communities, and industries. The department may enter into a linkage agreement with another jurisdiction when consistent with the provisions of this act, after publication of the proposed agreement, issuance of a formal notice of public hearing on the proposed agreement, and following a public hearing at least one month prior to entering into the agreement.
d. No later than two years after the effective date of this act, the department shall submit policy proposals to the Senate Environment and Energy Committee and the Assembly Environment, Natural Resources, and Solid Waste Committee, or their successors. The proposals shall be developed in consultation with emissions-intensive, trade-exposed businesses, major emitters, environmental advocates, and overburdened communities, and they shall outline a compliance pathway specific to emissions-intensive, trade-exposed businesses for achieving their proportionate share of the State's emissions reduction limits through 2050.
e. No later than six years after the effective date of this act, and at least every four years thereafter, the department shall submit a report to the Governor and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), which includes a comprehensive review of the implementation of the program to date, including, but not limited to, outcomes relative to the State's emissions reduction limits, overburdened communities, major emitters, and emissions-intensive, trade-exposed businesses.
f. The department shall submit suggestions for changes to this act to the Senate Environment and Energy Committee and the Assembly Environment, Natural Resources, and Solid Waste Committee, or their successors, if the department finds that any provision of this act prevents linking New Jersey's cap and invest program with that of any other jurisdiction.
3. (New section) a. No later than one year after the effective date of this act, the department shall determine an emissions baseline, which establishes the proportionate share that the total greenhouse gas emissions of major emitters bears to the total anthropogenic greenhouse gas emissions in the State, based on data reported to the department under section 5 of P.L.2007, c.112 (C.26:2C-42) or provided as required by this act, as well as other relevant data.
b. No later than two years after the effective date of this act, the department shall adopt annual allowance budgets for the first four-year compliance period of the program, which shall begin on the following calendar year. The annual allowance budgets shall be set to achieve the share of reductions by major emitters commensurate with the State's greenhouse gas emissions reduction goals established by the "Global Warming Response Act," P.L.2007, c.112 (C.26:2C-37 et al.). Annual allowance budgets shall be set such that the use of offset credits as compliance instruments does not prevent the achievement of the emissions limits. The department shall adopt annual allowance budgets for the program on a calendar year basis that provide for progressively equivalent reductions year over year. An allowance distributed under the program, either directly by the department pursuant to section 7 or 8 of this act or through auctions pursuant to section 6 of this act, shall not expire and may be held or banked, provided that the person holding the allowance does not exceed any holding limit established by the department pursuant to subsection d. of section 6 of this act.
c. No later than six years after the effective date of this act, and again no later than 14 years after the effective date of this act, the department shall complete an evaluation of the performance of the program, including its performance in reducing greenhouse gas emissions. If the evaluation shows that adjustments to the annual allowance budgets are necessary for major emitters to achieve their proportionate share of the State's greenhouse gas emissions reduction goals established by the "Global Warming Response Act," P.L.2007, c.112 (C.26:2C-37 et al.), the department shall adjust the annual allowance budgets accordingly. Nothing in this subsection shall be construed to preclude the department from making additional adjustments to annual allowance budgets as necessary to ensure successful achievement of the proportionate emissions reductions by major emitters. The department shall make public the circumstances, metrics, and processes that caused the department to adjust an annual allowance budget pursuant to this subsection.
4. (New section) a. Except as provided in subsection b. of this section, a person shall be considered a major emitter, for the purposes of this act, if the person:
(1) owns or operates a facility and the facility's emissions equal or exceed 25,000 metric tons of carbon dioxide equivalent;
(2) is an electric public utility that distributes electric power to end-users in the State and the emissions associated with the power equals or exceeds 25,000 metric tons of carbon dioxide equivalent. In consultation with any linked jurisdiction to the program established pursuant to this act, the department, in consultation with the Board of Public Utilities, shall adopt a methodology for addressing imported electricity associated with the PJM-administered regional electricity market;
(3) generates electric power in the State, and the emissions associated with the power equals or exceeds 25,000 metric tons of carbon dioxide equivalent.
(4) is a supplier of fossil fuels other than natural gas and from that fuel 25,000 metric tons or more of carbon dioxide equivalent emissions would result from the full combustion or oxidation, excluding the amounts for fuel products that are produced or imported with a documented final point of delivery outside of the State and combusted outside of the State;
(5) is a gas public utility that supplies natural gas in amounts that would result in at least 25,000 metric tons of carbon dioxide equivalent emissions if fully combusted or oxidized, excluding the amounts for fuel products that are produced or imported with a documented final point of delivery outside of the State and combusted outside of the State, and excluding the amounts (a) supplied to major emitters that qualify under paragraphs (1) through (4) of this subsection, and (b) delivered to opt-in entities; or
(6) owns or operates a railroad company that is regulated by the Board of Public Utilities and has annual greenhouse gas emissions of at least 25,000 metric tons of carbon dioxide equivalent.
b. When a major emitter reports emissions below the threshold established in subsection a. of this section for each year during an entire four-year compliance period, it shall no longer be considered a major emitter as of the beginning of the subsequent compliance period, unless the department provides notice to the major emitter at least 12 months before the end of the compliance period that the facility's emissions were within 10 percent of the threshold and that the person will continue to be designated as a major emitter for one additional compliance period, in order to ensure equity among all major emitters. Whenever a major emitter ceases to be a major emitter, the department shall notify the Senate Environment and Energy Committee and the Assembly Environment, Natural Resources, and Solid Waste Committee, or their successors, of the name of the major emitter and the reason why it is no longer a major emitter.
c. The following emissions are exempt from the provisions of this act:
(1) emissions from the combustion of aviation fuels;
(2) emissions from watercraft fuels supplied in the State that are combusted outside of the State;
(3) carbon dioxide emissions from the combustion of biomass or biofuels;
(4) emissions from motor vehicle fuel or special fuel that is used exclusively for agricultural purposes by a farm fuel user. This exemption shall be available only if the end purchaser of motor vehicle fuel or special fuel provides the seller with an exemption certificate, in a form and manner prescribed by the department, at the point of sale;
(5) emissions from facilities with North American industry classification system code 92811 (national security); and
(6) emissions from facilities that participate in the greenhouse gas emissions allowance trading program established pursuant to section 3 of P.L.2007, c.340 (C.26:2C-47).
d. The department shall not require multiple major emitters to have a compliance obligation for the same emissions.
e. A group of refineries, fuel suppliers, facilities using natural gas, and natural gas utilities may provide, by mutual agreement, for the assumption of the compliance obligation for fuel or natural gas supplied and combusted in the State by the entities, provided that they notify the department such an agreement at least 12 months prior to the compliance obligation period for which the agreement is applicable.
5. (New section) a. Each major emitter shall register to participate in the program, following procedures adopted by the department, no later than six months after the department adopts rules and regulations to establish the program. An entity registering to participate in the program shall describe, as part of the information provided to the department during the registration process, any direct or indirect affiliation with other registered entities.
b. A person responsible for greenhouse gas emissions that is not a major emitter may voluntarily participate in the program by registering as an opt-in entity. An opt-in entity shall satisfy the same registration requirements as a major emitter. Once registered, an opt-in entity shall be allowed to participate as a major emitter in auctions and shall assume the same compliance obligation to transfer compliance instruments equal to their emissions at the appointed transfer dates. An opt-in entity may opt out of the program at the end of any four-year compliance period by providing written notice to the department at least six months prior to the end of the compliance period. The opt-in entity shall continue to have a compliance obligation through the entire compliance period. An opt-in entity shall not be eligible to receive allowances directly distributed pursuant to sections 7 or 8 of this act.
c. A person that is not covered by the program and is not a major emitter or opt-in entity may voluntarily participate in the program as a general market participant. A general market participant shall meet all applicable registration requirements. A federally recognized tribe or federal agency may elect to participate in the program as an opt-in entity or general market participant.
d. (1) The department shall establish and use a secure, online, electronic tracking system to: (a) register entities in the program; (b) issue compliance instruments; (c) track ownership of compliance instruments; (d) enable and record compliance instrument transfers; (e) facilitate program compliance; and (f) support market oversight.
(2) The electronic tracking system shall assign two distinct accounts to each major emitter and opt-in entity, as follows:
(a) a compliance account where the compliance instruments are transferred to the department for retirement. Compliance instruments in compliance accounts shall not be sold, traded, or otherwise provided to another account or person; and
(b) a holding account that shall be used for the purpose of trading allowances. Allowances in holding accounts may be bought, sold, transferred to another registered entity, or traded. The amount of allowances a registered entity may have in its holding account may be constrained by the department. Information about the contents of each holding account, including, but not limited to, the name of the registered entity and the number of allowances in the account, shall be displayed on a regularly maintained and searchable public website established and updated by the department.
(3) Each registered general market participant shall be assigned a holding account on the system.
(4) The department shall maintain an account on the system for the purpose of retiring allowances transferred by registered entities and from the voluntary renewable reserve account.
6. (New section) a. The department shall hold a maximum of four auctions annually for the distribution of greenhouse gas emissions allowances, plus any necessary reserve auctions. Each allowance shall be equivalent to one metric ton of greenhouse gas emissions, measured as a carbon dioxide equivalent. The department shall offer only such number of allowances at each auction as will enhance the likelihood of achieving the State's greenhouse gas emissions reduction goals. The department shall engage a qualified, independent contractor to run the auctions. The department shall also engage a qualified financial services administrator to hold the bid guarantees, evaluate bid guarantees, and inform the department of the value of bid guarantees once the bids are accepted. Auction proceeds shall be deposited in the "Global Warming Solutions Fund" established pursuant to section 6 of P.L.2007, c.340 (C.26:2C-50) and shall be used for the purposes delineated for that fund in section 7 of P.L.2007, c.340 (C.26:2C-51).
b. Auctions shall be open to major emitters, opt-in entities, and general market participants that are registered entities in good standing. Registered entities intending to participate in an auction shall submit an application to participate at least 30 days prior to the auction. The application shall include the documentation required for review and approval by the department. A registered entity shall be eligible to participate only after receiving a notice of approval by the department. Each registered entity that elects to participate in the auction shall have a different representative. Only a representative with an approved auction account shall be authorized to access the auction platform to submit an application or confirm the intent to bid for the registered entity, submit bids on behalf of the registered entity during the bidding window, or to download reports specific to the auction. The department may develop additional requirements for a registered entity to register and participate in a given auction.
c. The department shall establish minimum and maximum prices for a greenhouse gas emissions allowance for each auction. For the first year in which an auction is held, the minimum price for an allowance shall be $50. The department shall annually increase the minimum price using an annual adjustment factor that is determined by adding five percent of the value of an allowance plus the rate of inflation as measured by the most recently available 12 months of the consumer price index for all urban consumers (CPI-U).
d. The department shall require a bid guarantee, payable to the financial services administrator, in an amount greater than or equal to the sum of the maximum value of the bids to be submitted by the registered entity. To protect the integrity of the auctions, a registered entity or group of registered entities with a direct corporate association shall subject to auction purchase and holding limits, to be determined by the department. The department may impose additional limits if it deems necessary to protect the integrity and functioning of the auctions.
e. A major emitter or an opt-in entity shall not purchase more than 10 percent of the allowances offered during a single auction. A general market participant shall not purchase more than four percent of the allowances offered during a single auction, and shall not own, in aggregate, more than 10 percent of total allowances to be issued in a calendar year. No registered entity shall purchase more than the entity's bid guarantee.
f. An auction may include allowances from the annual allowance budget of the current year, allowances from the annual allowance budgets for upcoming years, and allowances from the annual allowance budgets from prior years that remain to be distributed.
g. The department shall implement measures to guard against bidder collusion and minimize the potential for market manipulation. A registered entity may not release or disclose any bidding information, including the entity's intent to participate or refrain from participating in an auction, the entity's auction approval status; the entity's bidding strategy, bid price, or bid quantity, or information on the bid guarantee provided to the financial services administrator. The department may cancel or restrict a previously approved auction participation application or reject a new application if the department determines that a registered entity has:
(1) provided false or misleading facts;
(2) withheld material information that could influence a decision by the department;
(3) violated any part of the auction rules; or
(4) violated registration requirements.
h. Any cancellation or restriction approved by the department pursuant to subsection f. of this section may be permanent or for a specified number of auctions and the cancellation or restriction imposed shall be in addition to any remedies that may be available pursuant to other State or federal laws.
i. The department, auction operator, and financial services administrator shall keep records related to the auction confidential and such records shall be exempt from public disclosure in their entirety. These records shall include:
(1) bidding information, including bid prices, bid quantities, and bid guarantees provided to the financial services administrator;
(2) information contained in the secure, online electronic tracking system established by the department pursuant to section 5 of this act; and
(3) financial, proprietary, and other market-sensitive information, as determined by the department.
j. The department shall design allowance auctions so as to allow, to the maximum extent practicable, linking with external greenhouse gas emissions trading programs in other jurisdictions and to facilitate the transfer of allowances when the State's program has entered into a linkage agreement with other external greenhouse gas emissions trading programs. The department may conduct auctions jointly with linked jurisdictions.
7. (New section) a. The department shall distribute an allocation of allowances to major emitters at no cost if the operations of the emitter are classified as emissions-intensive and trade-exposed, as determined by being engaged in one or more of the processes described by the following industry descriptions and codes in the North American industry classification system:
(1) metals manufacturing, including iron and steel making, ferroalloy and primary metals manufacturing, secondary aluminum smelting and alloying, aluminum sheet, plate, and foil manufacturing, and smelting, refining, and alloying of other nonferrous metals, North American industry classification system codes beginning with 331;
(2) paper manufacturing, including pulp mills, paper mills, and paperboard milling, North American industry classification system codes beginning with 322;
(3) aerospace product and parts manufacturing, North American industry classification system codes beginning with 3364;
(4) wood products manufacturing, North American industry classification system codes beginning with 321;
(5) nonmetallic mineral manufacturing, including glass container manufacturing, North American industry classification system codes beginning with 327;
(6) chemical manufacturing, North American industry classification system codes beginning with 325;
(7) computer and electronic product manufacturing, including semiconductor and related device manufacturing, North American industry classification system codes beginning with 334;
(8) food manufacturing, North American industry classification system codes beginning with 311;
(9) cement manufacturing, North American industry classification system code 327310;
(10) petroleum refining, North American industry classification system code 324110;
(11) asphalt paving mixtures and block manufacturing from refined petroleum, North American industry classification system code 324121;
(12) asphalt shingle and coating manufacturing from refined petroleum, North American industry classification system code 324122; and
(13) all other petroleum and coal products manufacturing from refined petroleum, North American industry classification system code 324199.
b. The department shall develop objective criteria for both emissions intensity and trade exposure for the purpose of identifying emissions-intensive, trade-exposed manufacturing businesses that would qualify for no-cost emissions allowances pursuant to subsection a. of this section.
c. For each year during the first four-year compliance period of the program, a major emitter that is determined by the department to be emissions-intensive and trade-exposed shall be awarded no-cost allowances equal to 100 percent of the baseline greenhouse gas emissions of each of the emitter's emissions-intensive, trade exposed facilities, as determined pursuant to section 3 of this act. For each year during the second four-year compliance period, the major emitter shall be awarded no-cost allowances equal to 97 percent of the baseline greenhouse gas emissions of the emissions-intensive, trade exposed facilities. For each year during the third compliance period, the major emitter shall be awarded no-cost allowances equal to 94 percent of the baseline greenhouse gas emissions of the emissions-intensive, trade exposed facilities. For subsequent compliance periods, the department shall determine an appropriate level for the distribution of no-cost allowances, which shall balance economic and environmental considerations.
d. If the actual emissions of an emissions-intensive, trade- exposed major emitter exceeds the no-cost allowances assigned for that compliance period, the emitter shall acquire additional allowances or offset credits such that the total quantity of its emissions are covered by allowances or offset credits. The department shall limit the use of offset credits for compliance by an emissions-intensive, trade-exposed facility, such that the quantity of no-cost allowances plus the provision of offset credits does not exceed 100 percent of the facility's total compliance obligation over a compliance period.
e. A no-cost allowance distributed pursuant to this section shall not be traded or sold.
f. The department shall withhold or withdraw the relevant share of no-cost allowances allocated to a major emitter pursuant to this section in the event that a facility owned or operated by the major emitter ceases production in the State. In the event that a major emitter curtails all production in the State, the no-cost allowances distributed to the major emitter shall be retained but shall not be traded, sold, or transferred. A facility that temporarily ceases operations shall not be eligible to receive no-cost allowances during the period of curtailment.
8. (New section) a. In order to mitigate the cost burden of the program on electricity and natural gas ratepayers in the State, the department shall distribute an allocation of allowances to major emitters that are electric public utilities or gas public utilities at no cost.
b. For each year during the first four-year compliance period of the program, a major emitter that is an electric public utility or gas public utility shall be awarded no-cost allowances equal to 100 percent of the baseline greenhouse gas emissions of the major emitter, as determined pursuant to section 3 of this act. For each year during the second four-year compliance period, the major emitter shall be awarded no-cost allowances equal to 97 percent of the major emitter's baseline greenhouse gas emissions. For each year during the third compliance period, the major emitter shall be awarded no-cost allowances equal to 94 percent of the major emitter's baseline greenhouse gas emissions. For subsequent compliance periods, the department shall determine an appropriate level for the distribution of no-cost allowances, which shall balance the costs to ratepayers and environmental considerations.
c. If the actual emissions of a covered electric or gas public utility exceed the no-cost allowances assigned for that compliance period, the utility shall acquire additional allowances or offset credits such that the total quantity of the utility's emissions are covered by allowances or offset credits. The department shall limit the use of offset credits for compliance by a utility, such that the quantity of no-cost allowances plus the provision of offset credits does not exceed 100 percent of the facility's total compliance obligation over a compliance period.
d. A no-cost allowance distributed pursuant to this section shall not be traded or sold.
9. (New section) a. As part of the program established pursuant to this act, the department shall develop protocols for approving and retiring offset credits, which may be used to meet a portion of a major emitter or an opt-in entity's compliance obligation pursuant to this act. An offset credit shall be registered and tracked as a compliance instrument pursuant to section 5 of this act. In order to qualify, an offset credit shall:
(1) be associated with a project that provides direct environmental benefits to the State or is located in a jurisdiction with which New Jersey has entered into a linkage agreement;
(2) be certified by a recognized registry; and
(3) represent greenhouse gas emissions reductions or removals that are:
(a) real, permanent, quantifiable, verifiable, and enforceable; and
(b) in addition to greenhouse gas emission reductions or removals otherwise required by law and other greenhouse gas emissions reductions or removals that would otherwise occur.
b. No more than five percent of a major emitter's or opt-in entity's compliance obligation during the first compliance period may be met by retiring offset credits. At least 50 percent of a major emitter's or opt-in entity's compliance obligation in the first compliance period shall satisfied by offset credits that are associated with projects that provide direct environmental benefits to the State.
c. No more than four percent of a major emitter's or opt-in entity's compliance obligation during the second compliance period may be met by retiring offset credits. At least 75 percent of a major emitter's or opt-in entity's compliance obligation in the second compliance period shall be satisfied by offset credits that are associated with projects that provide direct environmental benefits to the State.
d. The limits in subsections b. and c. of this section may be reduced for a specific major emitter if the department determines that the emitter:
(1) contributes substantively to cumulative air pollution burden in an overburdened community; or
(2) violates any permits required by any federal or State air pollution control laws where the violation may result in an increase in emissions.
e. In developing protocols governing offset projects and covered and opt-in entities' use of offset credits, the department shall:
(1) take into consideration standards, rules, or protocols for offset projects and offset credits established by other states, provinces, and countries with programs comparable to the program established in this act;
(2) encourage opportunities for the development of offset projects in this State by adopting offset protocols that may include, but need not be limited to, protocols that make use of aggregation or other mechanisms to reduce transaction costs related to the development of offset projects and that support the development of carbon dioxide removal projects;
(3) adopt a process for monitoring and invalidating offset credits as necessary to ensure the credit reflects emission reductions or removals that continue to meet the standards required by this section. If an offset credit is invalidated, the major emitter shall, within six months of the invalidation, transfer replacement credits or allowances to meet its compliance obligation. Failure to transfer the required credits or allowances shall be considered a violation subject to penalties as provided in section 11 of this act; and
(4) make use of aggregation or other mechanisms, including cost-effective inventory and monitoring provisions, to increase the development of offset and carbon removal projects by landowners across the broadest possible variety of types and sizes of lands, including small parcels of forested land.
10. (New section) a. The department shall establish a task force to produce information about fuel pricing, profit margins, and transaction data in the State. The task force shall include representatives from fuel suppliers, oil refineries, and others in the fuel supply chain.
b. The task force shall review issues including, but not limited to:
(1) previous studies and evaluations of fuel pricing in New Jersey;
(2) trends in fuel pricing in New Jersey;
(3) factors causing fuel prices in New Jersey to be higher than the national average and how these factors have changed over time;
(4) margins and profits at the fuel production, distribution, and retail levels;
(5) State tax policies, environmental protections, and regulatory factors that may impact fuel pricing and make the State's fuel marketplace more or less competitive;
(6) supply dynamics affecting the fuel markets in New Jersey; and
(7) potential reporting and auditing requirements that would make fuel pricing more transparent to New Jersey consumers.
c. Information gathered by the task force shall be kept confidential and shall not be made available to the general public pursuant to P.L.1963, c.73 (C.47:1A-1 et seq.), commonly known as the open public records act. However, the information may be aggregated to ensure confidentiality and utilized in summarized form as part of the task force's process and in the final report of the task force.
d. No later than two years after the date of enactment of this act, the task force shall submit a final report to the Governor, and to the Legislature, pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), after which the task force shall dissolve.
11. (New section) a. Whenever the Commissioner of Environmental Protection finds that a person has violated any provision of this act, or any rule or regulation adopted pursuant thereto, the commissioner may:
(1) issue an order requiring the person found to be in violation to comply in accordance with subsection b. of this section;
(2) bring a civil action in accordance with subsection c. of this section;
(3) levy a civil administrative penalty in accordance with subsection d. of this section; or
(4) bring an action for a civil penalty in accordance with subsection e. of this section.
b. Whenever the commissioner finds that a person has violated this act, or any rule or regulation adopted pursuant thereto, the commissioner may issue an administrative enforcement order specifying the provision or provisions of this act, or the rule or regulation adopted pursuant thereto, of which the person is in violation, citing the action that constituted the violation, requiring compliance with the provision violated, and giving notice to the person of the person's right to a hearing on the matters contained in the administrative enforcement order. The ordered person shall have 20 calendar days from receipt of the order within which to deliver to the commissioner a written request for a hearing. After the hearing and upon finding that a violation has occurred, the commissioner may issue a final order. If no hearing is requested, the order shall become final after the expiration of the 20-day period. A request for a hearing shall not automatically stay the effect of the order.
c. The commissioner is authorized to institute a civil action in Superior Court for appropriate relief from any violation of the provisions of this act, or any rule or regulation adopted pursuant thereto. This relief may include an assessment against the violator for the costs of any investigation, inspection, or audit that led to the discovery and establishment of the violation, and for the reasonable costs of preparing and litigating the case under this subsection.
d. The commissioner is authorized to impose a civil administrative penalty of up to $50,000 for each violation, provided that each day during which the violation continues shall constitute an additional, separate, and distinct offense. In assessing a civil administrative penalty, the commissioner shall consider the severity of the violation, the measures taken to prevent further violations, and whether the penalty will maintain an appropriate deterrent. Prior to the assessment of a civil administrative penalty, the person committing the violation shall be notified by certified mail or personal service that the penalty is being assessed. The notice shall identify the section of the statute, rule, regulation, or order violated; recite the facts alleged to constitute a violation; state the basis for the amount of the civil administrative penalties to be assessed; and affirm the rights of the alleged violator to a hearing. The ordered party shall have 35 days from receipt of the notice within which to deliver to the commissioner a written request for a hearing. After the hearing and upon finding that a violation has occurred, the commissioner may issue a final order after assessing the amount of the fine specified in the notice. If no hearing is requested, the notice shall become a final order after the expiration of the 35-day period. Payment of the assessment is due when a final order is issued or the notice becomes a final order. The authority to levy an administrative order is in addition to all other enforcement provisions in this act, and the payment of any assessment shall not be deemed to affect the availability of any other enforcement provisions in connection with the violation for which the assessment is levied. The department may compromise any civil administrative penalty assessed under this section in an amount and with conditions the department determines appropriate.
e. A person who violates any provision of this act, or any rule or regulation adopted pursuant thereto, or an administrative order issued pursuant to subsection b. of this section, or a court order issued pursuant to subsection c. of this section, or who fails to pay a civil administrative penalty in full pursuant to subsection d. of this section, or who knowingly makes any false or misleading statement on any application, record, report, or other document required to be submitted to the department, shall be subject, upon order of a court, to a civil penalty not to exceed $50,000 per day of the violation, and each day during which the violation continues shall constitute an additional, separate, and distinct offense. Any civil penalty imposed pursuant to this subsection may be collected with costs in a summary proceeding pursuant to the "Penalty Enforcement Law of 1999," P.L.1999, c.274 (C.2A:58-10 et seq.), or may be collected in a civil action commenced by the commissioner. In addition to any penalties, costs or interest charges, the Superior Court, or the municipal court as the case may be, may assess against the violator the amount of economic benefit accruing to the violator from the violation.
f. The exercise of any of the remedies provided in this section shall not preclude the seeking of any other remedy specified.
12. Section 7 of P.L.2007, c.340 (C.26:2C-51) is amended to read as follows:
7. a. The agencies administering programs established pursuant to this section shall maximize coordination in the administration of the programs to avoid overlap between the uses of the fund prescribed in this section.
b. Moneys in the fund, after appropriation annually for payment of administrative costs authorized pursuant to subsection c. of this section, shall be annually appropriated and used for the following purposes:
(1) Sixty percent shall be allocated to the New Jersey Economic Development Authority to provide grants and other forms of financial assistance to commercial, institutional, and industrial entities to support end-use energy efficiency projects and new, efficient electric generation facilities that are state of the art, as determined by the department, including but not limited to energy efficiency and renewable energy applications, to develop combined heat and power production and other high efficiency electric generation facilities, to stimulate or reward investment in the development of innovative carbon emissions abatement technologies with significant carbon emissions reduction or avoidance potential, to develop qualified offshore wind projects pursuant to section 3 of P.L.2010, c.57 (C.48:3-87.1), and to provide financial assistance to manufacturers of equipment associated with qualified offshore wind projects. The authority, in consultation with the board and the department, shall determine: (a) the appropriate level of grants or other forms of financial assistance to be awarded to individual commercial, institutional, and industrial sectors and to individual projects within each of these sectors; (b) the evaluation criteria for selecting projects to be awarded grants or other forms of financial assistance, which criteria shall include the ability of the project to result in a measurable reduction of the emission of greenhouse gases or a measurable reduction in energy demand, provided, however, that neither the development of a new combined heat and power production facility, nor an increase in the electrical and thermal output of an existing combined heat and power production facility, shall be subject to the requirement to demonstrate such a measurable reduction; and (c) the process by which grants or other forms of financial assistance can be applied for and awarded including, if applicable, the payment terms and conditions for authority investments in certain projects with commercial viability;
(2) Twenty percent shall be allocated to the board to support programs that are designed to reduce electricity demand or costs to electricity customers in the low-income and moderate-income residential sector with a focus on urban areas, including efforts to address heat island effect and reduce impacts on ratepayers attributable to the implementation of P.L.2007, c.340 (C.26:2C-45 et al.) or to support the light duty plug-in electric vehicle incentive program and the incentive program for in-home electric vehicle service equipment established pursuant to sections 4 and 6 of P.L.2019, c.362 (C.48:25-4 and C.48:25-6). For the purposes of this paragraph, the board, in consultation with the authority and the department, shall determine the types of programs to be supported and the mechanism by which to quantify benefits to ensure that the supported programs result in a measurable reduction in energy demand or accomplishment of the plug-in electric vehicle goals established pursuant to section 3 of P.L.2019, c.362 (C.48:25-3);
(3) Ten percent shall be allocated to the department to support programs designed to promote local government efforts to plan, develop and implement measures to reduce greenhouse gas emissions, including but not limited to technical assistance to local governments, and the awarding of grants and other forms of assistance to local governments to conduct and implement energy efficiency, renewable energy, and distributed energy programs and land use planning where the grant or assistance results in a measurable reduction of the emission of greenhouse gases or a measurable reduction in energy demand. For the purpose of conducting any program pursuant to this paragraph, the department, in consultation with the authority and the board, shall determine: (a) the appropriate level of grants or other forms of financial assistance to be awarded to local governments; (b) the evaluation criteria for selecting projects to be awarded grants or other forms of financial assistance; (c) the process by which grants or other forms of financial assistance can be applied for and awarded; and (d) a mechanism by which to quantify benefits; and
(4) Ten percent shall be allocated to the department to support programs that enhance the stewardship and restoration of the State's forests and tidal marshes that provide important opportunities to sequester or reduce greenhouse gases.
c. (1) The department may use up to four percent of the total amount in the fund each year to pay for administrative costs justifiable and approved in the annual budget process, incurred by the department in administering the provisions of P.L.2007, c.340 (C.26:2C-45 et al.), the provisions of P.L. , c. (C. ) (pending before the Legislature as this bill, and in administering programs to reduce the emissions of greenhouse gases including any obligations that may arise under subsection a. of section 11 of P.L.2007, c.340 (C.26:2C-55).
(2) The board may use up to two percent of the total amount in the fund each year to pay for administrative costs justifiable and approved in the annual budget process, incurred by the board in administering the provisions of P.L.2007, c.340 (C.26:2C-45 et al.) and in administering programs to reduce the emissions of greenhouse gases including any obligations that may arise under subsection a. of section 11 of P.L.2007, c.340 (C.26:2C-55).
(3) The New Jersey Economic Development Authority may use up to two percent of the total amount in the fund each year to pay for administrative costs justifiable and approved in the annual budget process, incurred by the authority in administering the provisions of P.L.2007, c.340 (C.26:2C-45 et al.) and in administering programs to reduce the emissions of greenhouse gases.
d. The State Comptroller shall conduct or supervise independent audit and fiscal oversight functions of the fund and its uses.
(cf: P.L.2019, c.362, s.12)
13. The Department of Environmental Protection shall, in accordance with the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), adopt rules and regulations as necessary to implement this act.
14. This act shall take effect immediately.
STATEMENT
This bill would require the Department of Environmental Protection (DEP) to establish a Statewide cap on greenhouse gas emissions from certain major emitters of greenhouse gases in the State, and to hold auctions to sell greenhouse gas emissions allowances, which major emitters would be required to purchase and retire in order to emit greenhouse gases.
As provided in section 4 of the bill, "major emitters" would consist of certain entities that emit at least 25,000 metric tons of greenhouse gases annually, including persons who own and operate any facility with that level of emissions, electric public utilities, electric power generators, gas public utilities and other fossil fuel suppliers, and railroad companies. Subsection c. of section 4 of the bill would exempt certain greenhouse gas emissions from the 25,000 metric ton threshold, including emissions from facilities that participate in the greenhouse gas emissions allowance trading program established pursuant to section 3 of P.L.2007, c.340 (C.26:2C-47), i.e., the Regional Greenhouse Gas Initiative (RGGI).
Under the bill, the DEP would be required to establish an emissions baseline, which establishes the proportionate share that the total greenhouse gas emissions of major emitters bears to the total anthropogenic greenhouse gas emissions in the State, based on data reported to the department under section 5 of P.L.2007, c.112 (C.26:2C-42) or provided as required by this act, as well as other relevant data. Within two years after the bill is enacted, and periodically thereafter, the DEP would be required to adopt annual allowance budgets - the amount of allowable greenhouse gas emissions from major emitters in the State - for the first four-year compliance period of the program. The budgets would be based on the greenhouse gas emissions reduction goals established in the "Global Warming Response Act," P.L.2007, c.112 (C.26:2C-37 et al.).
The bill would also require the DEP to hold up to four auctions annually for the distribution of greenhouse gas emissions allowances, which would permit the holder to emit one metric ton of greenhouse gases. The bill would require the DEP to establish minimum and maximum prices for a greenhouse gas emissions allowance for each auction. For the first year in which an auction is held, the minimum price for an allowance would be $50, and the DEP would be required to increase the price by five percent plus the rate of inflation each year thereafter. Proceeds from the auction would be deposited in the "Global Warming Solutions Fund" established pursuant to section 6 of P.L.2007, c.340 (C.26:2C-50) and would be used for the purposes delineated for that fund in section 7 of P.L.2007, c.340 (C.26:2C-51). The bill would amend the latter section of law to authorize the DEP to utilize up to four percent of deposits in the "Global Warming Solutions Fund" to administer the program established by the bill.
Under sections 7 and 8 of the bill, the DEP would be required to distribute an allocation of allowances, at no cost, to certain emissions-intensive, trade exposed industries, in order to mitigate the economic burden on those industries. Similarly, the DEP would distribute allowances at no cost to electric public utilities and gas public utilities, in order to mitigate costs to utility ratepayers. For the first four years of the program, the no-cost allowance allocation would be 100 percent of entity's baseline greenhouse gas emissions, and would decrease by three percent each four years thereafter, after which the bill would direct the DEP to establish an appropriate allocation.
Section 9 of the bill would direct the DEP to develop protocols for approving and retiring offset credits, which could also be used to authorize a major emitter to emit one metric ton of greenhouse gases. The bill would establish certain minimum requirements for an offset credit, including that it be associated with a project that provides direct environmental benefits to the State or is located in a jurisdiction with which New Jersey has entered into a linkage agreement. Section 10 of the bill would direct the DEP to establish a temporary stakeholder task force to produce information about fuel pricing, profit margins, and transaction data in the State. The task force would submit a report to the Governor and the Legislature, after which it would dissolve.
A person who violates the bill's provisions could be liable for a civil penalty or civil administrative penalty of up to $50,000 per violation. The bill would provide that each day during which a violation continues would constitute an additional, separate, and distinct offense.
